Question

Billy Bob Supply Company uses four special journals: purchases, sales, cash receipts, and cash disbursements, along with a general journal. The following transactions occurred in August: Aug. 1 15 18 Purchased merchandise from Able Co. for $6,000, terms 2/10, 1/30. P Received check from Fox Co. (full balance outstanding for July sale (less the 2% discount) Sent check No.757 for $4,900 to Able Co. in full payment of outstanding balance from the prior month. tuin Sold merchandise on credit to Coe Co. for $5,000, terms 2/10, n/30, Invoice No. 245. Cost of the goods sold is $2,500. Sale Purchased merchandise from Baker Co. for $6,000, terms 1/15, n/30. P Purchased office supplies on credit from Echo Co. for $500, terms n/30. P Returned merchandise costing S300 to Able Co. from August 1 purchase. We Paid Able Co. for the August 1 purchase, (less discount) Check No. 758. Received cash payment from Coe Co, for August 4 sale (less discount). Se Paid August rent of $1,000, Check No. 759. Cush din Sold merchandise on credit to Fox Co, for $5.000, terms 2/10, 1/30, Invoice No. 246. Cost of the goods sold is $2,600. Sal Sold merchandise on credit to Coe Co. for $4,000, terms 2/10, n/30, Invoice No. 247. Cost of the goods sold is $2,200. Received $2,400 cash for the $2,000 note receivable from Fox Corp. (included $400 Interest). Sold merchandise on credit to Thomas Co.for $6,000, terms 2/10, n/30, Invoice No. 248. Cost of the goods sold was $3,400. Made cash payment in full to Baker Co. for the August 5 purchase, Check No 760. Sold merchandise on credit to Fox Co. for $4,000, terms 2/10, n/30, Invoice No. 249. Cost of the goods sold was $2,400. Sold merchandise on credit to Thomas Co. for $4,000, terms 2/10. n/30. Invoice No. 250. Cost of the goods sold is $2,200. Received full payment less discount from Fox Co. for Aug.15 sale. Recorded cash sales for the month $7.500. The cost of the goods sold was $3.000. Paid Telephone Bill for August of $400, Check No. 761. Paid Salaries of $500 each to 3 employees Checks 762, 763, 764. Issued Check # 765 for $5,300 ($5,000 note payable and $300 interest expense) 18 19 20 20 22 28 29 30 Record the above transactions in the appropriate special journals below. Post to ledgers and prepare the trial balances. GENERAL JOURNAL PR Debit Credit Date Account Title

Answer 1

Purchase Journal Book:

Explanation: Here we are going to record all the transactions which are related to purchases of Inventory, office supplies and other purchases. The First Column Date is the Date on which you are entering the transaction, Account is the name of the supplier or Creditor, Invoice date is the date mentioned in the invoice, Terms of credit if any mentioned should be entered in terms column, Account Payable amount is the amount of the transaction.

if the purchases is merchandise then the amount should be entered in Inventory debit. If the purchases is office supplies hen the amount should be entered in office supplies debit. if the purchases is not from aforesaid 2 categories then it should be entered in other a/c debit.

Date	Account	Invoice Date	Terms	PR	Account Payable Credit	Inventory Debit	Office supp Debit	Other A\c Debit
	Able co.,	Aug 1	2/10, n/30		6,000	6,000	-	-
	Baker co.,	Aug 5	1/15, n/30		6,000	6,000
	Eco co.,	Aug 8	n30		500		500
	TOTAL				12,500	12,000	500

Sales Journal Book:

Explanation: Here we are going to record all the transactions which are related to Sales. The First Column Date is the Date of transaction, Account is the name of the Customer or Debtor, Invoice no is the no. mentioned in the invoice, if any mentioned should be entered in this column, Account Receivable amount is the amount of the transaction. Cost of goods sold given in question is entered in the last column which denotes debit to cost of goods sold and credit to inventory.

Date	Account Debited	Invoice No.	PR	Accounts Receivable - Debit Sales - Credit	Cost of goods sold - Debit Inventory - Credit
Aug 4	Coe Co.,	245		5,000	2,500
Aug 15	Fox Co.,	246		5,000	2,600
Aug 18	Coe co.,	247		4,000	2,200
Aug 19	Thomas Co.,	248		6,000	3,400
Aug 20	Fox Co.,	249		4,000	2,400
Aug 22	Thomas Co.,	250		4,000	2,200
Aug 28	Cash			7,000	3,000
	Total			35,000	18,300

Cash Disbursement Journal Book:

Explanation: Here we are going to record all the transactions which are related to Cash Payments. The First Column Date is the Date of transaction. we have to enter the check no. in the second column, Payee is the column in which we have to enter the name of the person we are paying cash, Cash Credit is the amount of the cash that we pay and Inventory Credit is the column where we have to enter the Purchases Return. Incase payment is made for credit purchases then we have to enter the amount in a/c payable debit and incase payment is for any other purpose then it is entered in other a/c debited.

on Aug 11 payment is made to able co., the Purchase amount is $6,000 but we have returned $300 so the net sales is $5,700. as we have paid it within 10 days of purchase we are eligible for 2% discount as per the terms of purchase. Similarly on Aug 20 payment is made to Baker co., the Purchase amount is $6,000 as we have paid it within 15 days of purchase we are eligible for 1% discount as per the terms of purchase.

Date	Check	Payee	Account debited	PR	Cash Credited	Inventory Credit	Other Accounts Debited	A/c Payable Debited
Aug 3	757	Able Co.,	Able Co.,		4,900			4,900
9			Able Co.,			300		300
11	758	Able Co.,	Able Co.,		5,586 (6000-300 = 5,700 * 98% = 5,586)			5,586
15	759		Rent		1,000		1,000
20	760	Baker Co.,	Baker Co.,		5,940 (6000*99%)			5,940
29	761		Telephone Bill		400		400
	762 to 764		Salaries		1,500		1,500
30	765		Notes Payable		5,000		5,000
	765		Interest Expense		300		300
	Total				24,626	300	8,200	16,726

Cash Receipts Journal Book:

Explanation: Here we are going to record all the transactions which are related to Cash Receipts. The First Column Date is the Date of transaction. in the second column we have enter the name of the person/ company from whom we received the payment, Explanation if any for the transaction in the 3rd column, Amount of cash Received is to be debited, Sales discount if any given has to be entered in 6th column, if we received the amount of previous credit sales then enter in A/c receivable a/c, if we received the amount from Cash Sales then in sales Credit, if we received the amount from any other source then enter in Other A/c credit, Similar to sales journal, here too Cost of goods sold given in question is entered in the column which denotes debit to cost of goods sold and credit to inventory.

Date	A/c Credited	Explanation	PR	Cash Debit	Sales discount Dr	A/c Receivable credit	Sales Credit	Cost of goods sold Debit InventoryCredit	Other Accounts Credited
Aug 13	Coe Co.,	Paid within 10 days so eligible for 2% discount		4,900	100	5,000		2,500
18	Notes Receivable	Note Receivable + Interest received from Fox Corp		2,000					2,000
	Interest			400					400
25	Fox Co.,	Paid within 10 days so eligible for 2% discount		4,900	100	5,000		2,600
28	Sales			7,500			7,500	3,000
	Total			19,700	200	10,000	7,500	8,100	2,400